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Brian and Sassy Henry had always planned on slow and steady
growth for their South Carolina company, Pawleys Island Specialty
Foods. That was the sensible approach.

But the appetite for their Palmetto Cheese spreads grew so quickly
that the married couple--Brian serves as president and CEO;
Sassy creates the recipes--could no longer meet manufacturing
and distribution demands on their own. So they made the
decision to team up with Duke Sandwich Productions, an Easley,
S.C.-based manufacturer that presented them with a growth
opportunity they simply couldn't ignore.

"They shared the belief that Palmetto Cheese could really go big,
and that if it did we'd need to be prepared with the capacity to
handle it," Brian says. "They found a facility eight times larger
than their current one and said they were willing to move into it
as long as we were committed to staying with them long-term."

Seeing the offer as a vote of confidence in their company's
future, the Henrys agreed. Duke Sandwich developed a new
80,000-square-foot facility in 2012 and hired additional staff to
handle production.

"Strategically, it was a long-term move that gave me the license
to say, 'Now we can go all out,'" Henry says. Today Palmetto
Cheese is carried in more than 5,000 stores in 31 states, and
sales jumped from 1.1 million units in 2010 to 4.1 million in
2013.

Startups, particularly those funded by outside investors, go into
business with growth in mind. But expanding too quickly can cause
serious growing pains. From adding employees and office space to
increasing production, expanding services or extending product
lines, doing too much too soon can have devastating consequences.
Every stage of growth takes a bit of good faith, but there are
some reliable indicators that your startup may in fact be ready
to scale. Look for these signs before you leap.

Bob Davis, general partner at Highland Capital Partners in
Cambridge, Mass., says when his venture capital firm is
considering an investment opportunity, one of the crucial
deciding factors is whether the company has the right staff to
accelerate growth. "Very often you see companies that do the same
thing, where one wins and one loses, such as Facebook and
Myspace," he says. "So why does one win and one lose? Generally
one has a great team that out-executes the other."

In addition to strong leaders, it's important to have a properly
built-out team of qualified workers who are invested in the
company's success. "Without great leaders and then the right
people in place, even the greatest idea is going to struggle,"
Davis says. "But with an amazing team, mediocrity can turn into
something special."

But it's not just about the internal team. For the Henrys, the
green light to growth came when they realized they had a
manufacturer partner, Duke Sandwich, that wanted to grow with
them.

"We are their No. 1 brand as far as production, and their new
plant has the capacity to handle our growth for years to come,"
Henry says.

Henry says that when his business gained a certain amount of
momentum, he no longer had to approach chain customers about
selling Palmetto Cheese. Instead, he was fielding requests. That
indicated to him that his brand was reaching a level of awareness
that positioned it for growth.

"Costco came to us fairly early on in the process, and that was
an eye-opener," he says. Next came retail giant Publix (spurred
by requests from customers), and it wasn't long before Kroger,
Piggly Wiggly and other supermarkets followed suit. "We have more
than 20 grocery-store customers that represent 5,000 grocery
stores, so one request that pans out is significant to our
growth."

Indeed, each additional client can be a catalyst for growth, even
if you are initially reluctant to diversify or expand beyond a
particular region. "Over time you realize you can build
warehouses and do the things necessary to build it out, but
you've already shown in one market you can make it work," Davis
says. "That allows me to look at that business and feel very good
about its prospects."

Even if you've conquered a particular market and know that when
the time is right you'll have what it takes to move to the next
one, you need to recognize when to say no.

Laura Kozelouzek, founder and CEO of New York-based Quest
Workspaces, is constantly looking for new opportunities for her
business, which was founded in 2010 and provides serviced office
space in 11 locations in Florida and New York. "You have to be
discriminating in terms of what growth you can handle. You need
to look at the economic benefits and consider your existing
infrastructure and resources," she says.

For example, while her business typically owns the locations from
which it operates, she recently took the opportunity to manage a
portfolio of office buildings--an extension that worked because
of the properties' proximity to her existing centers. "We were
able to leverage the systems we already have in place there, so
that was a growth opportunity that made sense," she says.

Conversely, another landlord with whom she had a solid
relationship wanted to incorporate her services into its office
buildings in markets outside of Quest's two core areas. "I had to
pass, because it would have brought us into markets where we'd be
spreading ourselves thin," she says. "That was an instance where
saying no was actually a great growth strategy."

While there may be plenty of clear signs that your business is
ready to expand, successful growth can be tough to achieve if
you're not personally ready for the accompanying commitment,
warns Troy Hazard, author of Future-Proofing Your Business.
Because it can take up to 12 months for operations to achieve a
normal rhythm after a growthspurt, expansion can affect not only
your business but also your personal life, your family and even
your health.

"You have to be ready to duplicate yourself when you open that
next location or expand your offerings," Hazard says. "Until your
new management team can fully run things for you, you are the one
who has to do double time between the existing part of your
business and the new, so you have to be prepared for the
sacrifices that will take."

Many startups fail to properly gauge how their sales cycles
dictate their ability to expand, which can cause a serious
deficit in cash flow. Hazard says it typically takes at least
four months to see a return on capital investments made to expand
a business. "Growth costs money, and a lot of people forget
that," he points out. "You cannot be ready to grow unless you're
in a position to carry the business until the sales catch up with
the investment."

Positive cash flow is what gave John Olajide, founder and CEO of
Axxess Technology Solutions, the confidence to grow his
Dallas-based home-healthcare company from 15 to 80 employees in
just one year. The growth was warranted, Olajide believes,
because he's getting the contracts he needs to build out his
system and handle increasing demand.

"Our software is a recurring revenue model, so as we've grown and
taken on additional customers every month, the revenue from the
previous month was already there," he says, adding that Axxess
signs up an average of 50 home-healthcare organizations per
month. "That's a lot of growth to take care of all of those
people; we need to make sure we're providing great services and
support."

Many entrepreneurs find it's easy to make excuses when they miss
the goals they've laid out in their business plans. James Fisher,
co-founder of Cincinnati-based travel-planning site
Roadtrippers.com, says proving you can meet defined objectives
builds both internal and external confidence in your company's
ability to expand.

When his business launched in 2012, investors gave his team a
challenge to capture half a million users per month and to hold
those numbers for two months. While Fisher thought it would take
12 months to achieve that goal, Roadtrippers was able to
accomplish it in just two.

"That was a clear indicator to us that our growth was warranted,"
he says. "When you can show a growth story, it warms investors
and gives you a little stability in terms of confidence that
goals will be met from there."